Which of the following would make cheating on a collusive agreement more likely?
a. greater ease of observing other firms' prices
b. a reduction in the number of sellers in the market
c. close monitoring by the Department of Justice
d. more frequent shifts in market demand
e. an increase in the number of customers in the market
D
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Which of the following is true about long-run equilibrium in a monopolistically competitive market?
a. Firms earn zero economic profit because price equals long-run average cost, but the equilibrium is not allocatively efficient because price exceeds the marginal cost of the last unit produced. b. They may earn negative, zero, or positive economic profit because monopolistically competitive firms are price takers. c. Each firm faces a perfectly elastic demand curve and earns zero economic profit because price equals long-run average cost, and are allocatively efficient because price equals marginal cost for the last unit sold. d. None of the above are correct.
If muffins and bagels are substitutes, a higher price for bagels would result in a(n)
a. increase in the demand for bagels. b. decrease in the demand for bagels. c. increase in the demand for muffins. d. decrease in the demand for muffins.